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Trading in the Foreign Exchange Market is becoming more and more common for the Individual Investor, as the world markets become more accessible then the requirement to hedge the related foreign exchange risk increases, at the same time awareness of the market draws attention to the potential profits to be made from it.
The idea that the normal foreign exchange trader works as a major bank employee is no longer the case, this is a multi-trillion dollar a day business and it includes corporate hedgers, car manufacturers, oil producers, importers and exporter as well as foreign exchange mortgage managers and firms specializing in fund management offshore.
Now, the normal individual trader can access the foreign exchange market using sophisticated financial trading systems, which allows them to compete with the major players in the foreign exchange market. Berkeley ( Bahamas ) Limited offer private investors offshore access to foreign exchange trading through its own online trading platform. This is just one of the trading areas offered by Berkeley, which specializes in private investors offshore, investment services both online and telephone based through their offices in New Providence, the thriving business centre of the Bahamas.
In addition to online foreign exchange trading, Berkeley offer trading services in bullion, base metals, commodities, financials, energy, indices and equities. Most of such trading is done through futures, options and forward contracts, although it is also possible to take physical delivery off all commodities traded internationally if customers have such requirements
How does a foreign exchange trader act on the market?
Whether an investor wishes to undertake online foreign exchange trading or to gain access over the telephone, there are basically two methods of trading, either Spot or Forward. A Spot transaction means that an order is fixed at the price shown at the time, for delivery T2 or in two days time, alternatively one can book a deal for a Forward date usually any time over a three month period but it can be for a later date. A spot trader will be looking to close the position within the day, hoping to make a short term profit, however such foreign exchange traders may have the option of “ rolling spot “ for the next day and therefore pushing out their delivery requirements, sometimes indefinitely. A foreign exchange trader then may decide to trade with a Margin Account, this means that only in the case that they take physical delivery of the purchased currency do they have to part with the full amount of the sold currency. If a trader does not take such delivery, then they may back the position with a small deposit or margin, generally of about 2.5%, thereby controlling a $1,000,000 position with a margin of 2.5% or $25,000. This offers a gearing of 40x the initial investment so profits and losses can huge. It is advisable that traders entering such contracts seek suitable financial advice.
Currency Futures and Option are also available, these are dealt through a recognized exchange, (either on an online trading platform or over the telephone) such as the CME or CBOT and are highly liquid contracts and best execution can be guaranteed.
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Foreign Exchange Trading
